Question

1.

a) Describe three ways that McDonald's restaurants create time utility for customers.

b) Identify and briefly discuss the three characteristics which differentiate services from goods.

2. What is the difference between quality and productivity? Explain the connection between productivity and quality.

Answer 1

Ans. 1.

a). Three ways in which a McDonald's restaurant creates time utility for customers

McDonald’s became a leader in the restaurant and fast food industry not solely because of its food products (including burgers) but also because of its strong focus on customer service and creating time utility, early use of marketing techniques, and responsiveness to the competition. Below are how McDonald’s restaurants create time utility for their customers.

Introducing the factory-line production models in the restaurant industry- McDonald's restaurants have cut down the service serving times effectively, which is quite satisfying for the customers, by using the factory line production models and techniques. Hot food is served with short wait times, and in some cases, customers may also get a refund when their wait time lasts for more than 5 minutes. The serving time has been cut down from 20 minutes to a mere 30 seconds with the introduction of the factory line and production assembly design to the commercial kitchens for delivering foods in the least time.

Introduction of multiple windows- McDonald’s has introduced separate and multiple windows for making payments and to get food, which has also provided for saving of time and the creation of faster flows.

Self-serving kiosks- McDonald's is also one of the first restaurant chains to introduce the self-serving kiosks that reduce the need for workers and can be used for ordering foods. Customers can create personalized and customized food for themselves by using the touch-screen options available on a kiosk, which can be used to buy custom burgers and the other orderings of the menu. Order fulfillment is also more accurate now, which further improves on-time utility.

Best kitchen utilities- McDonald’s is also using the most advanced and latest utensils and technologies in its kitchens to ensure that the cooking times are reduced. For instance, the company has been using the high-efficiency fryers, which take minimum time for frying the chips that is one of the most ordered food at McDonald’s.

These time utility and improvement strategies of McDonald's have ensured that the customers can buy the most affordable and quality food products in the least of time.

b). Three Characteristics that Differentiate Services from Goods
A service results when mechanical or human efforts are applied to the objects or people. Some examples of services include landscaping, medical care, salon treatments, counseling, and child care. A service is an activity through which work is performed for others, while goods and products take the form of physical objects. The main characteristics that differentiate services from goods are given below.

1.Intangibility: the most basic or important difference between a service and a good/product is the characteristic of intangibility. Services cannot be seen touched, felt, heard, or tested. That is why customers cannot easily evaluate a service before buying it. Service-oriented companies, however, try to create tangible representations so that consumers can understand the benefits. For instance, clinics use the photographs and images of vitamin pills to communicate that the treatment and prescription will make the patients healthy. However, goods are physical objects that can be touched and felt. Because of characteristics including intangibility and inseparability, the delivery of products goods and services differ. Goods/products are first produced, sold, and can only then be consumed. Services may be produced simultaneously along with their consumption.

2.Inseparability- a service may not be separated from the service provider or the location of service production. For instance, a haircut can be bought from a particular salon only by being at it. Therefore, the production and consumption of services cannot be separated when compared to goods that can be produced and consumed in different places.

3. Perishability- while it is easy to warehouse or store goods, services cannot be stored and inventoried, which is termed as perishability. For instance, a salon cannot produce 10 hair cuts in advance and store them. Therefore, all the time available for providing service should be used continually for preventing a loss in revenue.

4.Heterogeneity/Variability- while two or more goods/products produced by the same manufacturer along the same production lines will be almost identical, services provided by a given and same service provider may vary to a great extent. Variations in services may be found for the different customers and day/time of performance, which makes it hard for a company to standardize service quality.


2). Difference between Productivity and Quality

While productivity and quality may share certain similar characteristics (like a focus on inputs/outputs), there are significant differences between them. However, the main focus of productivity is to produce the maximum number of outputs by using a minimum number of inputs, and hence to be more efficient. Productivity can also be termed as the rate at which products/services are developed, performed, or produced, and how these tasks are being completed. Productivity may be measured by taking into account variables including the number of hours worked, the number of units produced, and others.

On the other hand, the concept of quality focuses on customer satisfaction that may be achieved through the quality of the output or service. It can be said to be the perception of customers regarding a business offering (including product or service) and the degree to which it meets their expectations. Quality may be measured following certain specifications or benchmarks, which may comply with the needs. While productivity may improve by working more hours or by employing more number of people, the same may not be true for quality.

The connection between Quality and Productivity

W. Edwards Deming and other quality experts have pointed out that quality may be positively associated with productivity. When the quality of a service or product is increased, there is a reduced need for fixing mistakes and hence productivity improved. However, this approach is not agreed to by all experts, and some point out that for improving quality the expenditures will be increased, and hence the cost of production costs will escalate. It will result in reduced productivity and higher prices.

In practical situations of manufacturing and production, it has been found that pushing for quality compromises productivity and vice-versa. This problem aggravates in the services sector, as the output and quality of services are even harder to determine, measure, and quantify. But creating a balance is quite important for any organization, as quality (or value enhancement) and productivity (or value addition) determine the competitiveness of a company. To remain competitive, firms need to synergize quality and productivity and to integrate them in a balanced proportion. Continual improvement and approaches including lean management may be used to create a finer and better balance between quality and productivity.